ORLANDO BAR GROUP, LLC D/B/A THE BASEMENT, THE ATTIC AND THE TREEHOUSE vs RON DESANTIS, IN HIS OFFICIAL CAPACITY AS THE GOVERNOR OF THE STATE OF FLORIDA, FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, ET AL.

• Court: District Court of Appeal of Florida
• Decided: April 8, 2022
• Docket: 21-1248
• Status: Published

Opinion

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

ORLANDO BAR GROUP, LLC D/B/A THE BASEMENT, THE ATTIC AND THE TREEHOUSE,

Appellants,

v. Case No. 5D21-1248 LT Case No. 2020-CA-010922-O

RON DESANTIS, IN HIS OFFICIAL CAPACITY AS THE GOVERNOR OF THE STATE OF FLORIDA, FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, ORANGE COUNTY, ET AL.,

Appellees.

________________________________/

Opinion filed April 8, 2022

Appeal from the Circuit Court for Orange County, John E. Jordan, Judge.

David H. Simmons, Deborah I. Mitchell, and Caitlin N. Emling, of de Beaubien, Simmons, Knight, Mantzaris & Neal, LLP, Orlando, and Spencer R. Munns, Joseph C. Shoemaker, and Jonathan G. Dulaney, of Bogin, Munns & Munns, P.A., Orlando for Appellants.

Raymond F. Treadwell, of Executive Office of the Governor, Tallahassee, for Appellee, Ron DeSantis.

David Axelman and Joseph Yauger Whealdon, III, of Department of Business and Professional Regulation, Tallahassee, for Appellee, for Department of Business and Professional Regulation.

Scott Robert McHenry, of Orange County Attorney’s Office, Orlando, for Appellee, Orange County, Florida.

No Appearance for Remaining Appellees.

EDWARDS, J.

In early response to the COVID-19 pandemic, various state and local

officials issued executive orders, some of which closed or severely restricted

the operation of bars. Appellants, Orlando Bar Group, LLC d/b/a The

Basement, The Attic, and The Treehouse, sued Appellees, Governor Ron

DeSantis, in his official capacity as the governor of the State of Florida, the

Florida Department of Business and Professional Regulations (“DBPR”), and

Orange County, Florida, seeking money damages for inverse condemnation.

2 Here, Appellants appeal the trial court’s order which granted Appellees’

motions to dismiss with prejudice. Appellants raise multiple issues on appeal;

several merit discussion, whereas others do not. Based on existing law, we

affirm as explained below and as to all other issues as well.

Executive COVID-19 Orders

In March of 2020, Governor DeSantis, employing executive orders,

declared a state of emergency and temporarily suspended all sales of

alcoholic beverages for vendors who derived more than fifty percent of their

gross revenue from the sale of alcoholic beverages. Three days later, the

Governor issued another executive order that suspended the sale of alcoholic

beverages for on-premises consumption but allowed bars and restaurants to

sell sealed, unopened, alcoholic beverages for off-premises consumption.

Later-issued orders limited the operation of bars to seated service and

reduced permissible operational capacity to half the normal occupancy

previously permitted by law. The DBPR and Orange County’s mayor issued

other orders which temporarily prohibited or limited the normal operation of

bars. After a period of time, bars were allowed to resume normal operation.

Appellants’ complaint alleged that they were among the bars whose business

operations were adversely affected by the various executive orders.

3 In their complaint, Appellants claimed that the temporary closure and

later restrictions of their businesses constituted governmental takings that

amounted to inverse condemnation entitling them to compensation.

Appellees responded with motions to dismiss. Following a hearing, the trial

court entered a lengthy order dismissing Appellants’ complaint with

prejudice. 1 Appellants did not move to amend their complaint, nor did they

move for rehearing. They did timely appeal the trial court’s order.

Analysis

Under the Florida Constitution, private property cannot be taken by the

government unless it is for public use and the owner of the property is fully

compensated. Art. X, § 6, Fla. Const.2 “Inverse condemnation is a cause of

action by a property owner to recover the value of property that has been de

facto taken by an agency having the power of eminent domain where no

formal exercise of that power has been undertaken.” Ocean Palm Golf Club

P’ship v. City of Flagler Beach, 139 So. 3d 463, 471 (Fla. 5th DCA 2014)

1 Appellants’ claim for declaratory relief was also dismissed with prejudice. We affirm that portion of the trial court’s order without further discussion. 2 The Takings Clause of the Fifth Amendment of the United States Constitution is interpreted by Florida courts to operate coextensively with article X, section 6(a) of the Florida Constitution. St. Johns River Water Mgmt. Dist. v. Koontz, 77 So. 3d 1220, 1222 (Fla. 2011), rev’d on other grounds, Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 596 (2013).

4 (quoting Osceola Cnty. v. Best Diversified, Inc., 936 So. 2d 55, 59–60 (Fla.

5th DCA 2006)).

Penn Central vs. Cedar Point Test

As explained by the Supreme Court, there are two categories of

governmental takings: physical and regulatory. See Cedar Point Nursery v.

Hassid, 141 S. Ct. 2063, 2071 (2021). “The government commits a physical

taking when it uses its power of eminent domain to formally condemn

property.” Id. (citing United States v. Gen. Motors Corp., 323 U.S. 373, 374–

75 (1945); U.S. ex rel. TVA v. Powelson, 319 U.S. 266, 270–71 (1943)). The

government also commits a physical taking where it “takes possession of

property without acquiring title to it.” Id. (citing United States v. Pewee Coal

Co., 341 U.S. 114, 115–17 (1951)). When a physical taking has occurred,

the rule is simple: “The government must pay for what it takes.” Id.

On the other hand, a regulatory taking may occur when the

government “imposes regulations that restrict an owner’s ability to use his

own property . . . .” Id. (citing Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l

Plan. Agency, 535 U.S. 302, 321–22 (2002)). “To determine whether a use

restriction effects a taking, this Court has generally applied the flexible test

developed in Penn Central,3 balancing factors such as the economic impact

3 Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978).

5 of the regulation, its interference with reasonable investment-backed

expectations, and the character of the government action.” Id. at 2072.

However, “[w]henever a regulation results in a physical appropriation of

property, a per se taking has occurred, and Penn Central has no place.” Id.

Appellants contend that they sufficiently alleged that the COVID

executive orders complained of constituted a per se taking because the

orders deprived them of their right to regulate access to their businesses.

Thus, Appellants argue that the Penn Central test, employed by the trial court,

does not apply to their claim and that the simple per se rule—the government

must pay for what it takes—applies to the COVID orders.

Appellants’ initial argument is that the trial court should have denied

Appellees’ motion to dismiss based upon the Supreme Court’s recent Cedar

Point decision. In Cedar Point, a California regulation allowed labor

organizations the right to access an agricultural employer’s property in order

to petition support for unionization. Id. at 2069. Specifically, the regulation

mandated that agricultural employers allow union organizers onto their

property for up to three hours a day for 120 days a year. Id. The Court held

that this regulation “appropriate[d] a right to invade the growers’ property and

therefore constitute[d] a per se physical taking.” Id. at 2072. Significantly, the

Supreme Court reasoned that the California regulation violated “‘one of the

6 most treasured’ rights of property ownership”: the right to exclude. Id. (citation

omitted).

Here, Appellants do not allege that the COVID orders violated their

right to exclude; rather, they argue the opposite and claim that the orders

violated “the right of property owners to allow others access to their

properties.” The Supreme Court’s holding in Cedar Point did not address and

does not support this alleged right.

The COVID orders at issue here did not permit third parties to access

Appellants’ property; they did the opposite by preventing Appellants from

having patrons on their premises and temporarily prohibiting Appellants from

selling alcohol for on-premises consumption. As such, the COVID orders did

not result in a physical appropriation and per se taking of Appellants’ property;

rather, the COVID orders regulated Appellants’ use of their property.

Consequently, Appellants are incorrect that the simple per se rule governs

their takings claims. Since the COVID orders were regulations affecting

Appellants’ ability to use their property, the Penn Central test was appropriate

to employ in determining whether the COVID orders amounted to a taking.

Thus, Appellants’ argument that the trial court erred in employing the Penn

Central test rather than the Cedar Point test is unavailing.

Categorical Regulatory Taking

7 Appellants next argue that their inverse condemnation claim should

have survived based upon Lucas v. South Carolina Coastal Council, 505 U.S.

1003, 1015 (1992). The Supreme Court found a categorical regulatory taking

in Lucas because the “[governmental] regulation denies all economically

beneficial or productive use of land.” Id. In Lucas, a landowner purchased

property and intended to build homes on the property. Id. at 1006–07. Before

the landowner could build any homes, South Carolina passed legislation

which barred him from erecting any permanent and habitable structures on

the property. Id. at 1007. The Supreme Court held that “when the owner of

real property has been called upon to sacrifice all economically beneficial

uses . . . he has suffered a taking.” Id. at 1019. 4

As the Court later explained in Tahoe, Lucas’ holding was “limited to

‘the extraordinary circumstance when no productive or economically

beneficial use of land is permitted.’” 535 U.S. at 330 (quoting Lucas, 505 U.S.

at 1017). “The emphasis on the word ‘no’ in the text of the opinion was, in

effect, reiterated in a footnote explaining that the categorical rule would not

apply if the diminution in value were 95% instead of 100%.” Id. (citing Lucas,

505 U.S. at 1019 n.8).

Appellants did not allege in their complaint that they owned the land 4

on which their businesses operated.

8 Taking Appellants’ allegations in their complaint to be true, the

economic impact of the COVID orders on their business was significant.

However, the impact of the orders amounted to a complete prohibition on the

sale of alcoholic beverages for only seventeen days, following which

Appellants’ businesses were incrementally permitted to return to limited sales

and operation before being allowed to return to their pre-pandemic mode in

approximately six months.

In Tahoe, an owner’s planned development was delayed for a period

of thirty-two months to allow for a study of the impact of all nearby real estate

development on the water quality of Lake Tahoe. 535 U.S. at 306. The

Supreme Court found that the thirty-two-month moratorium did not constitute

a taking. Id. at 319. The First District has similarly held that a temporary

moratorium on development did not amount to a compensable taking. Leon

Cnty. v. Gluesenkamp, 873 So. 2d 460, 466 (Fla. 1st DCA 2004);

Bradfordville Phipps Ltd. P’ship v. Leon Cnty., 804 So. 2d 464, 471 (Fla. 1st

DCA 2001). The challenged executive orders here resulted in temporary

cessation and limitation of Appellants’ businesses, not a complete or

permanent loss of the ability to do business. Accordingly, Appellants’ second

argument is likewise unavailing.

As-Applied Regulatory Taking

9 Appellants claim that even if their previous arguments fail, the

executive orders nevertheless amounted to a governmental taking when

analyzed using the Penn Central test. In Ocean Palm Golf Club Partnership,

this Court laid out the factors to be considered when determining whether an

as-applied taking has occurred:

In Penn Central, the Court identified three factors to apply when engaging in an analysis of whether a regulation constitutes a taking: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action.

139 So. 3d at 473 (quoting Leon Cnty., 873 So. 2d at 460).

In Scott v. Galaxy Fireworks, Inc., 111 So. 3d 898 (Fla. 2d DCA 2012),

the Second District employed the Penn Central test to determine whether an

executive order from Florida’s governor, which prohibited the sale of fireworks

from June 25 to July 9, 1998, constituted a taking. Id. at 898. Looking at the

first factor, economic impact on the claimant, the Second District found that

the fireworks sellers were not totally denied the value of their property, since

they could have sold their fireworks out-of-state and also could sell the

fireworks after the prohibition ended. Id. at 900. When analyzing the second

factor, interference with the firework seller’s investment-backed expectations,

the Second District noted that fireworks are a highly regulated business and

the sellers should have been on notice that further regulations could be

10 enacted from time to time. Id. When considering the third factor, character of

the governmental action, the Second District found that the executive order

was a valid exercise of the state’s police power, which was necessary to limit

the dangerous conditions that existed in Florida due to a dry period causing

an increased susceptibility to wildfires. Id.; see also Loretto v. Teleprompter

Manhattan CATV Corp., 458 U.S. 419, 426 (1982) (“As Penn Central affirms,

the Court has often upheld substantial regulation of an owner’s use of his own

property where deemed necessary to promote the public interest.”). Thus, the

Second District held that the executive order in question did not amount to a

compensable taking. Id. at 901.

Applying the Penn Central factors to the case at hand, it is clear that

the COVID orders did not constitute a taking. For the first factor, it is

undisputed that Appellants, along with numerous other businesses, were

financially impacted by the COVID orders. For the second factor, just like

firework sellers, sellers of alcohol are also in a highly regulated business. See

generally Ch. 561-568, Fla. Stat. (2021). For example, one of the emergency

powers granted to the Governor by statute is the ability to halt the sale of

alcohol during an emergency. See § 252.36(6)(h), Fla. Stat. (2021) (granting

governor ability to suspend or limit the “sale, dispensing, or transportation of

alcoholic beverages”). Thus, Appellants should have also been on notice that

11 further regulations could be enacted. Lastly, in consideration of the third

factor, the COVID orders represented a valid use of the state’s police power

to protect the general welfare, as noted by the trial court with citations to

several other contemporary COVID decisions. If the state can use its police

power to temporarily prohibit the sale of fireworks to prevent wildfires during

an exceptionally dry period in Florida, it stands to reason that the state can

also use its police powers in an effort to limit the spread of a highly infectious

and deadly virus.

As such, the impact of the COVID orders does not amount to a

compensable taking under the Penn Central test. Thus, because Appellants’

complaint did not state a cause of action for an inverse condemnation claim

under an as-applied taking theory, the motions to dismiss were properly

granted.

Dismissal Without Leave to Amend

None of the Appellees answered the complaint. Appellants’ complaint

was dismissed with prejudice based on the Appellees’ motions to dismiss.

Appellants correctly argue that plaintiffs typically have the ability to amend

their complaint as a matter of right once prior to an answer being filed. See

Boca Burger, Inc. v. F., 912 So. 2d 561, 567 (Fla. 2005). However, Appellants

did not move for leave to amend, did not file a proposed amended complaint,

12 and appealed rather than moving for rehearing on the dismissal being with

prejudice.

In Vorbeck v. Betancourt, the Third District discussed several cases,

including this Court’s opinion in Jelenc v. Draper, 678 So. 2d 917, 918 n.1

(Fla. 5th DCA 1996), in reaching the conclusion that “[i]t is now well settled

that the rule of preservation applies to the improper dismissal of a complaint

with prejudice.” 107 So. 3d 1142, 1147–48 (Fla. 3d DCA 2012). “In the

absence of fundamental error, an appellate court will not consider an issue

that has been raised for the first time on appeal.” Keech v. Yousef, 815 So.

2d 718, 719 (Fla. 5th DCA 2002). We hold that this issue has not been

preserved for appellate review.

AFFIRMED.

EVANDER and HARRIS, JJ., concur.